Nepal's state-owned petroleum monopoly Nepal Oil Corporation (NOC) has warned it will not be able to provide a regular supply of fuel to the market if the government doesn’t give it money to pay for its imports. The perpetually cash-strapped corporation has asked Nepal's Finance Ministry for a grant of 2 billion Nepalese rupees (US$22.6 million).

Officials from the Ministry of Commerce and Supplies said reduced shipments by its sole supplier, the Indian Oil Corporation (IOC), for the last three weeks has forced NOC to draw fuel from its stock to fulfil the demans in the Kathmandu Valley.

NOC’s reserves of 71,558 kl can stem the country’s gasoline demand for less than five days.

“Due to reduced imports, we have been supplying fuel to the market from our reserves too,” said NOC spokesperson Shiva Prasad Pudasaini. He added that there was no need for panic as NOC had been issuing 300 kl of petrol and 400 kl of diesel daily.

During the winter when load-shedding hours are extended in the country, the daily demand for diesel and petrol in the valley surges to 600 kl and 450 kl respectively. Pudasaini said that the valley had not suffered a petroleum shortage as of yet, but there has been some panic buying. “Due to rumours, consumers have been buying more than what they need, leading to a jump in demand.”

Meanwhile, NOC, which suffers debts to the tune of 28 billion Nepalese rupees, has been incurring monthly losses of 634 million Nepalese rupees by selling fuel at subsidised rates. Similarly, NOC presently owes 800 million Nepalese rupees to IOC. Pudasaini said that the Finance Ministry was agreeable to releasing the requested money, and that the supply would return to normal within a few days.

On February 13, NOC had ramped up the price of liquefied petroleum gas (LPG) by 630 Nepalese rupees per cylinder with the blessing of the government. The price hike was part of the corporation’s subsidised and non-subsidised pricing system. But prices were rolled back the next day following howls of protest from all quarters. NOC presently offers subsidies of 587 Nepalese rupees on a cylinder of LPG and 3.79 Nepalese rupees on a litre of diesel to all users. NOC’s loss in the LPG business alone stands at 763 million Nepalese rupees.